VCIT Offers Broader Diversification Than FIGB
Key Points
VCIT is significantly cheaper to own and has outperformed FIGB over the past year.
FIGB carries a lower beta and slightly smaller drawdown, but its total return has lagged.
Both funds invest in investment-grade bonds, but VCIT holds more securities and has far greater assets under management.
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The Vanguard Intermediate-Term Corporate Bond ETF (NASDAQ:VCIT) and the Fidelity Investment Grade Bond ETF (NYSEMKT:FIGB) both focus on high-quality U.S. bonds, but VCIT features a much lower expense ratio, stronger recent returns, and far greater scale, while FIGB has experienced slightly less volatility in the last five years.
Both VCIT and FIGB aim to provide investors with exposure to investment-grade U.S. bonds, targeting those seeking steady income and moderate risk. This comparison examines their costs, performance, risk, portfolio makeup, and trading characteristics to help determine which may better fit a diversified bond allocation.
Snapshot (cost & size)
| Metric | VCIT | FIGB |
|---|---|---|
| Issuer | Vanguard | Fidelity |
| Expense ratio | 0.03% | 0.36% |
| 1-yr return (as of 2026-03-11) | 7.4% | 4.9% |
| Dividend yield | 4.7% | 4.1% |
| Beta | 1.06 | 1.01 |
| AUM | $68.5 billion | $441.0 million |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.
VCIT is much more affordable, with an expense ratio less than a tenth of FIGB. VCIT also delivers a higher yield, offering a 4.7% payout compared to FIGB’s 4.1%.
Performance & risk comparison
| Metric | VCIT | FIGB |
|---|---|---|
| Max drawdown (5 y) | -20.6% | -18.1% |
| Growth of $1,000 over 5 years | $1,076 | $1,025 |
What's inside
FIGB targets U.S. investment-grade bonds, covering a variety of sectors within the high-quality segment. The fund holds 685 securities as of Feb. 27, 2026, with 13.3% in cash, 47% in intermediate-term bonds, and 31% in long-term government bonds. At five years old, FIGB offers a compact portfolio for core bond exposure.
VCIT also invests exclusively in investment-grade bonds, but it is far more diversified, holding 2,289 securities. Its largest positions include bonds issued by Meta Platforms, Oracle, and Pfizer Investment Enterprises Pte Ltd, reflecting a tilt toward corporate issuers. Over 91% of its holdings have a maturity of five to 10 years, with 6% of the portfolio maturing in 10 to 15 years. Both funds avoid leverage or other structural quirks.
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What this means for investors
The year ahead could be a good time to consider adding bond funds to a portfolio. Stock valuations are stretched, while lower interest rates could boost bond prices. VCIT and FIGB are high-yield bond funds, but VCIT seems to offer more to investors than FIGB.
The main advantage of FIGB is its slightly lower drawdown over the past few years. But its higher expense ratio, which is more than ten times higher than VCIT, will add up to substantially higher costs for investors over many years.
VCIT not only offers a much lower expense ratio but also a higher dividend yield. Vanguard is known for offering solid, low-cost funds, and the VCIT ETF sweetens the pot with an attractive 4.7% dividend yield, compared to 4.1% for the FIGB.
If the economy slows in 2026, these bond funds will add ballast to a stock portfolio. But VCIT’s lower cost, higher yield, and greater liquidity with over $68 billion in net assets might be the better choice for most investors.
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John Ballard has positions in Meta Platforms and Oracle. The Motley Fool has positions in and recommends Meta Platforms, Oracle, and Pfizer. The Motley Fool has a disclosure policy.
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